Code Red at Evergrande 🛑

Ola raises a pot, WhatsApp's crypto push, and regulating algo trading.

Market summary: 📊

India continued to push upward, facing resistance but adding a tiny bit on Thursday. US again turned around sharply flogging tech, giving up most gains made earlier in the week.

US:

• S&P 500 - down 0.72%

• Nasdaq  - down 1.49%

India:

• Nifty 50 - up 0.27%

• Sensex - up 0.27%

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What’s brewing hot ☕

1️⃣ Here we go again — Amazon got a slap-in-face $1.3 billion fine from Italy’s antitrust police, for asking small merchants to use its own logistics services in exchange for “more visibility and metrics” — which regulators say amounts to abuse of power in Europe. 🤷‍♀️ That’s probably one of the largest fines levied in Europe on AMZN, but still $1.3B against a ~$400B revenue line? Move on.

2️⃣ COVID drives payments boom — RazorPay gave Moneycontrol a sneak-peek into how post-COVID digitization is driving its business. For 2021, the platform will process close to $60 billion in total volumes — beating its own estimates by 20%! Revenues grew 250% YoY, and the business is targeting $90 billion in volumes for next year. Fyi, Stripe processes $350B a year, and PayPal’s Braintree probably does $100B+… long road ahead, but quite a ride for RP so far, that too in an emerging market. 👏

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Evergrande is looking like the Titanic ⚰️

What happened — the financial world is once again on the edge of its seat after Evergrande, the Chinese real-estate firm on the verge of a collapse, ended up missing a major debt payment, as of today standing in default.

If you’re lost on how we got here, here’s a quick refresher.

Evergrande was due to pay ~$83 million in payments (on $1.2 billion in international bonds) couple days ago. They missed an earlier deadline, then got a 30 day extension, and that has passed too. Lenders haven’t heard a word from the team. Ratings agency Fitch promptly slapped a default tag.

Chain reaction — what’s worse? a non-payment in these loans could trigger what’s called a “cross default” — basically a clause that says if Evergrande doesn’t pay a certain loan, it has defaulted ALL of its other loans too. 

That’s about $19 billion in international loans at risk right now. China, typically steps in to avoid corporate blowups on its land, but so far has been mum about this fiasco.

Big picture — in total, a $300 billion loan book at risk here — a ticking time bomb that could decimate China’s real estate market, monetary system, sending global shockwaves far far out.

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Whatsapp launches crypto payments 💲

What’s poppin’ — last week, Facebook’s payment’s boss David Marcus announced his resignation, but that ain’t weighing things at Zuck’s shop. Whatsapp will start rolling out USDP (stable-coin) backed peer-to-peer payments in the US this week.

The wallet built on programmable Pax Dollar ($USDP), a stable-coin tracking the USD. Folks can just enter their credit card info or bank account, and send out $$ while texting on the app. No “buying” and holding crypto, no other complicated shenanigans.

FB plans on bundling the Novi-wallet tightly across all its products — useful for shopping, splitting bills, creator payments, gaming… over time.

For Indians spoilt by the comforts of UPI, it may not seem much, but so far the aging payment rails in the US, 2-3 days it takes to settle transactions, and broad dependency of merchants, small businesses, on sandwich of apps like Venmo, Cash, Zelle — a smoother alternative integrated into social media could be game changing.

Big picture — $2 billion+ Whatsapp users worldwide. FB could instantly scale to hundreds of billions in volumes, diversifying away from an ad-heavy biz.

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Delhivery made a quick acquisition 💪

What happened — the logistics-services provider acquired Transition Robotics, a maker of unmanned drones and aerial monitoring systems. 

The Santa Cruz, California based startup is designing a flagship drone product called Jumpship, useful for surveying large swaths of lands, real estate assets, large facilities and such. Products aren’t commercial yet, but Transition runs a shop that’s pretty solid on UAV tech and design skills.

We’re guessing Delhivery is buying them for the tech, to strengthen its own drone-delivery ambitions currently in R&D. And also, a good “possibility” to pitch to potential investors going into the IPO. 

Meanwhile Ola secured its bag, ☝️

Camp-Bhavish got 2 checks this week. First, Edelweiss and a few others wired $139 million to the ride-hailing business, valuing it at $7.3 billion. Ride-hailing demand still trails 2019 levels, but investors are probably sniffing an IPO on the horizon to offer a sweet exit event.

Then, Temasek, the Singapore government’s investment arm, smitten by Ola’s booking-stats for the Electric Bike, wrote a $52.7 million separate check for a piece of the Ola Electric business.

Set for $$ for a couple months here. 🤙

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Closing out — SEBI looking at Algo Trading 🕵️‍♂️

SEBI is a bit nervous about retail investors writing and copying code, and possibly manipulating markets with algorithmic trading, or worse, themselves falling prey to scams and opaque strategies.

So a framework to regulate algo trading is being actively considered. 

SEBI had set up a working group to research the nuances of the game, which submitted its findings in a consultation paper.  Ideas are now being heard openly from the public for things it may have missed. Link to the report. 

Bottomline — multiple startups and tools coming up in this space lately. Robust framework defining the limits will leave the ground fertile for innovation.

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What else are we Snackin’ 🍿💻 

✈️ Travel gotta wait — DGCA extended the suspension of international flights to and from India, till January 30th. Omicron ate your vacay. 

💸 More funders —  Twilio, the communications API company, launched a $50 million fund to invest in startups built using its technology platforms. 

🧐 Old feed coming back — Instagram’s Adam Mosseri was grilled by the US congress. Among several promises, he said Insta is thinking of reverting to a chronological feed.

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